Money laundering has become a world-wide menace. The goal of a large
number of criminal acts is to generate a profit for the individual or
group that carries out the act. Money laundering is the processing of
these criminal proceeds to disguise their illegal origin. This process is
of critical importance, as it enables the criminal to enjoy these profits
without jeopardizing their source.

Some of the offences of like- illegal arms sales, smuggling, and the
activities of organised crime, including for example drug trafficking and
prostitution rings, can generate huge sums. Insider trading, bribery and
computer fraud schemes can also produce large profits and create the
incentive to legitimise the ill-gotten gains through money laundering.

What is meant by Money Laundering?

Money laundering is the process of moving illegally acquired cash through
financial systems so that it appears to be legally acquired
Money laundering is the processing of dirty money in order to disguise
their illegal origin. Dirty money is proceeds derived from criminal
conduct and criminals want the money to look like it came from a
legitimate source.

Anti Money Laundering Act

In India, the Anti Money Laundering (AML) measures are controlled through
the Prevention of Money Laundering Act, 2002 which was brought in force
with effect from 1st July 2005. RBI, SEBI and IRDA have been brought under
the PML Act, and therefore it will be applicable to all financial
institutions, banks, mutual funds, insurance companies, and their
financial intermediaries. The agency monitoring the AML activities in
India is called Financial Intelligence Unit (FIU IND) and compliance is
required by all financial intermediaries.

Background
The Act implements the Political Declaration adopted by the Special
Session of the UN General Assembly, 1999 which called upon the
Member-States to adopt money-laundering legislation and programme.
Accordingly, in India the Act was enacted after incorporating the
recommendations of the Standing Committee on finance presented to the Lok
Sabha on 4th March, 1999. The Act thereafter was incorporated and enacted
on 17th January, 2003.

Punishment of Money Laundering:

The punishment for the offence of Money Laundering is rigorous
imprisonment for a term not less than 3 years extending to 7 years and
shall be liable to fine upto Rs. 5,00,000. But if the crime involved in
Money Laundering deals with any of the offences specified under para 2 of
part A of the Schedule then the maximum punishment awarded shall extend to
10 years. The offences referred to in the para 2 of part A deals with
Offences under the Narcotic Drugs And Psychotropic Substances Act, 1985.

Attachment, Adjudication and Confiscation:

The act deals with the confiscation of the property in accordance with the
chapter III of the said Act. The attachments are done by the Director or
any person below the Deputy Director authorised to do so by him.

The property here in question relates to both movable and immovable
property. In case of immovable property, the term shall include all
persons claiming/entitled to claim any interest in the property.

The Adjudicating Authority shall have the same powers as are vested in a
Civil Court under the Code of Civil Procedure and that the proceedings
shall be deemed to be taken as judicial proceeding coming within the ambit
of the meaning of 193 and Section 228 of the Indian Penal Code.

The Act provides that every banking company, financial institution and
intermediaries should maintain a record of transaction and provide this
information to the Director when required to do so. They are also required
to verify and maintain the records of the identity of all its clients.
Such records shall be maintained for a period of 10 years from the date of
cessation of the transaction between the clients and the banking
companies.

As the passing of the information is part of the statute hence no
proceedings can be taken on account of the same. The procedure for
procuring the information shall be drawn by the Central Government in
consultation with the RBI.

This particular chapter has been included keeping in mind the usage of
cash for the purposes of illegal transactions particularly advanced for
sale/purchase of property. The check over the Bank creates a stricter
balance because the influx and out flux of money can easily be kept in
account.
Summons, Searches and Seizures, etc.

The chapter deals with the technicalities involved in survey, search and
seizure, power of arrest or retention of property or records as well as
presumptions as to records/property, or even inter-connected transaction.
The burden of proof however shall lie on the accused to show that his
property is untainted.

Appellate Tribunal:

The Appellate Tribunal was established by Central Government to hear
appeals against the dealers of Adjudicating Authority and authorities
under this Act.
Appeals to the Appellate Tribunal can be made by the Director, or any
person aggrieved by an order made by the Adjudicating Authority, or any
banking institution or allied institution within 45 days from the date on
which a copy of the order is received accompanied by the prescribed fees.
The Appellate Tribunal shall comprise of a Chairperson and 2 other
Members.

The chapter further provides that the Civil Court shall have no
jurisdiction over the suit/proceeding empowered to be determined by the
Director, Adjudicating Authority or Appellate Tribunal. However appeal may
be furthered to the High Court within 60 days from the date of
communication of the decision/order of Appellate Tribunal to him.

Special Courts:

The Central Government shall constitute the Special Courts in consultation
of the Chief Justice of India to try the offence of Money Laundering.
The offences triable by Special Court are the scheduled offences. However
due respect shall be paid to the Code of Criminal Procedure. In fact, the
Code shall also apply to the Special Courts. Accordingly appeals and
revisions can be made to the Higher Courts.

Authorities:
Like any other Act, even PMLA provides for certain Authorities. They are:
1 Director/ Additional Director/ Joint Director.
2 Deputy Director
3 Assistant Director, and
4 Other officers appointed by the Act.
All the aforesaid appointments shall be made by the central government.
However, the powers granted are in accordance with the grade of the
authority and accordingly powers of the superior authority can be given
over to the lesser authority to reduce the burden of the same.

To assist the officers, certain other officers may be appointed like
1 Officers of customs of Central Excise Department
2 Officers under the NDPs Act
3 Officers of the Stock Exchange
4 Officers of the RBI
5 Officers of the police
6 Officers of the Securities Exchange Board
7 Officers of Central Government, State Government, local authorities/
banking companies.

Reciprocal Arrangement for Assistance in certain matters and Procedure
for Attachment and Confiscation of Property:

This chapter states that the Central Government may enter into agreement
with the Foreign Government in respect of this Act for enforcing the
provisions of the Act or exchanging information. In order to examine the
facts/circumstances, enforce steps as per the specification of the Special
Courts or to forward the evidences to the Special Courts etc. Similarly,
the Central Government shall also assist the contracting state. The basic
idea is that of international co-operation and the members stat of UN
particularly have an obligation to co-operate on accepted principles.

Amendment
There were certain important amendments that were brought in 2005.
1 Amendment of section 2- In the definition the definition of
investigation was also added.
2 Amendment of section 28- Changes were brought in to the

appointment of Chairperson or a Member of the Appellate Tribunal.3
Amendment of section 73- The insertion of the clause stating that the
police officer shall also have the investigating power. Prevailing laws in
India on anti-money launderingIn India Prevention of Money laundering in
the sense of seizure and confiscation of proceeds of crime is age old. The
statutes prevailing before the Prevention of Money Laundering Act,
2002(Money Laundering Act of 2002) are: (a) Criminal Law Amendment
Ordinance (XXXVIII of 1944)(b) The Smugglers and Foreign Exchange
Manipulators (Forfeiture of Property) Act, 1976(c)Narcotic Drugs and
Psychotropic Substances Act, 1985.

Conclusion
It is to be noted that even after so many efforts and prevailing laws,
India is among six countries being actively monitored by Interpol and
International banking watchdogs after the detection of massive
money-laundering because of inadequate internal compliance procedures.